SpaceX shares extended their post-listing decline on Friday, erasing more than $1 trillion in market value from the company's record high as investors reassessed the outlook for the aerospace and artificial intelligence giant following a rocket launch delay.
The stock fell 5.4% to $123.99, reducing SpaceX's market capitalization to approximately $1.63 trillion, down from a peak of $2.64 trillion reached on June 16, just three trading sessions after its blockbuster initial public offering.
The decline leaves the shares trading below their $135 IPO price, reversing the strong early gains that followed what became the largest public offering in history.
Friday's sell-off came after SpaceX postponed the launch of its Starship rocket because of an engine issue, raising fresh questions about the timeline for one of the company's most ambitious development programs.
The company later confirmed it plans to make another launch attempt after replacing two Raptor engines, with Chief Executive Elon Musk indicating the next test could take place early next week.
Portfolio manager Joe Gilbert of Integrity Asset Management said the failed launch was "not ideal" for the investment narrative, although technical setbacks remain an expected part of space exploration.
He added that investors are becoming more cautious as enthusiasm surrounding the commercial space sector cools, prompting a reassessment of the lofty valuations that have driven recent gains.
Many analysts argued that launch delays should be viewed within the context of SpaceX's rapid development strategy rather than as a sign of structural weakness.
Raymond James analyst Brian Gesuale said technical incidents are an inherent feature of the company's accelerated testing approach, which aims to improve rocket reusability, increase payload capacity, and support faster deployment of next-generation Starlink V3 satellites as well as future NASA Artemis missions.
Gesuale noted that, even with the latest postponement, another launch next week would reduce the interval between Starship flights to less than 60 days, a significant improvement from the 221-day gap between the previous two missions.
Earlier this month, he initiated coverage of SpaceX with a Strong Buy rating and an $800 price target, the highest on Wall Street and roughly 545% above Friday's closing price.
Starship sits at the heart of SpaceX's long-term strategy to expand its satellite communications business, build orbital data centers to support AI computing, and ultimately transport humans to the Moon and Mars.
The company has invested more than $15 billion in developing the spacecraft, according to its IPO prospectus.
Greg Palm of Clear Street said any prolonged delay in Starship's development could slow the rollout of Starlink services, including the company's Direct-to-Cell satellite connectivity network, because lower launch costs are essential for deploying satellites at scale.
Analysts at Royal Bank of Canada echoed that view, arguing that Starship's ability to dramatically reduce launch costs is critical to enabling future projects such as orbital computing infrastructure. However, they cautioned that investors should expect an uneven development path as the company works toward routine, fully reusable launches.
Despite the recent correction, Wall Street remains broadly optimistic about SpaceX's prospects. More than 80% of analysts tracked by Bloomberg maintain Buy or equivalent ratings, with a consensus price target of $235.34, implying nearly 90% upside from current levels.
Still, investors are preparing for additional selling pressure as insider lock-up restrictions gradually expire, allowing early shareholders to sell stock into the market over the coming months.
Mark Malek, chief investment officer at Siebert Financial said many investors are revisiting their original investment assumptions as the lock-up period approaches, while others who missed the IPO are waiting for more attractive entry points as the company's valuation normalizes.
SpaceX briefly recovered some of its losses after reports that it is in talks to provide advanced computing capabilities to the Pentagon, adding to existing partnerships with major technology companies.
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